Lehigh Valley legislators want arena funding law changed

But Sen. Pat Browne said he's not ready to give up on striking a deal with townships.

Some Lehigh Valley legislators with suburban constituents are lobbying… (Harry Fisher, THE MORNING…)

June 14, 2012|By Matt Assad and Scott Kraus, Of The Morning Call

Fearing that Allentown's hockey arena could be headed for a two-year court battle, some Lehigh Valley legislators with suburban constituents are lobbying for a change in the embattled state law that funds the project.

A half-dozen Republican lawmakers want Sen. Pat Browne, R-Lehigh — who authored the arena law — to remove the use of earned income tax collections of other communities outside the city to help build the arena.

It is those collections that prompted 18 Valley municipalities and one school district, many represented by the six lawmakers, to challenge the law in Commonwealth Court, bringing the downtown arena project to a halt.

For now, Browne still has faith that negotiations can settle the lawsuit by municipalities that are challenging the Neighborhood Improvement Zone law that helps fund Allentown's $220 million downtown arena project.

Changing the law, he said, would not be easy.

"Yes, House Republicans have for weeks, even months, been asking that changes be made in the statute, but I'm not ready to go there yet," Browne said. "I'm trying to find a solution, and right now, I still think it's at the negotiating table."

State Reps. Justin Simmons, Ryan Mackenzie, Marcia Hahn, Joe Emerick, Gary Day and Julie Harhart have made overtures to Browne about finding a way to end the stalemate.

The drumbeat for Browne to change the law has peaked because the best chance to do it appears to be this month, when the state is scheduled to pass its annual budget. A companion bill amending the state's fiscal code, due by June 30, often includes other statutes and changes loaded into the bill by legislative leaders.

Allentown's 130-acre Neighborhood Improvement Zone was created in the 2009 fiscal code bill, and when it was tweaked last year, the fiscal code was used again.

Separate legislation can also be pushed through in June as part of the horse trading that accompanies budget negotiations. Once lawmakers depart for the summer, it could be months before any changes could even be considered.

With the budget a must-pass piece of legislation, it can be the best vehicle for local legislation. But the difficulty of getting behind the wheel of that vehicle suggests why Browne hasn't been ready to start driving on improvement zone legislation.

To get a law change into the fiscal code amendment, Browne would have to get the endorsement of House and Senate Republican leaders. It's even possible, if the budget vote is close, that he would also need the endorsement of top Democrats in each chamber.

And even if gets support from all of those, Gov. Tom Corbett would have to agree to include the change in his budget.

All of that is made even more difficult now that the Neighborhood Improvement Zone has become a public issue. The law itself, and the changes enacted last year, flew largely under the radar.

Since Hanover [Northampton County] and Bethlehem townships filed their lawsuit, arguing that it is unlawful for Allentown to keep the earned income taxes of township residents who work in the zone to help pay for the arena, 16 other municipalities and one school district have joined the fight. In addition, the Pennsylvania State Association of Townships Supervisors, which represents 1,455 townships, has joined the lawsuit.

All of those could be lobbying the Legislature, making it more difficult to find a consensus legislative leaders are willing to endorse.

"There are a lot of moving parts," Browne said. "Making legislation is not easy."

Simmons and Harhart said Browne has been approached individually and by a group to change the Neighborhood Improvement Zone law. But both say they have not approached their leaders and have received no commitment of support from outside the Valley.

"We're moving in a direction that we hope can lead to a legislative solution," Simmons said.

That solution would likely involve at least two changes. One would eliminate earned income tax collections from people who live outside Allentown. Under the city's unique taxing zone, all state and local taxes — except real estate taxes — in the zone can be used to help pay for the $220 million arena complex.

The municipalities sued, arguing that it is unconstitutional for the city to use their earned income tax collections without their permission. The city has since proposed a deal to return all the EIT collections, but municipal leaders have rejected the offer, saying the law must be changed.

A report released last week estimated that $2.3 million in EIT is collected each year in the Neighborhood Improvement Zone. The law change would mean that the money would simply be returned to the municipalities, as it was every year before the NIZ was created. However, the EIT collections for improvement zone workers who live in the city — amounting to about $432,000 a year — could be used for the arena.